The multi-brand, multi-category and multi-channel strategy has proven to reap rewards as Samsonite on Thursday posted double-digit growth for the sixth consecutive year in 2015, driven largely by the growth in Europe and Asia.
CEO Ramesh Tainwala believes China is the biggest growth opportunity for Samsonite in the next five year and vows to transform all its retail stores into omni-channel businesses in three years. He also revealed Samsonite’s plan to grow multi-brand retail footprint not only in Asia but also the world.
Samsonite’s full year result, released on Thursday, showed net sales rose 11.9 percent to USD2.43 billion at constant currencies for the year ended on 31 December 2015. Excluding foreign currency effects, adjusted net income surged 9.5 percent to USD216.9 million.
Net sales in Asia, the largest region for Samsonite, climbed 12.8 percent to USD947.6 million at constant currencies in 2015 compared to the previous year, following the 17.7 percent growth in Europe.
Australia posted the highest growth at constant currencies in the region as net sales jumped 39.4 percent year-on-year to USD56.2 million, followed by 37.7 percent growth in Japan and 13 percent in China.
Net sales in China, Samsonite’s largest market in Asia, gained 13 percent to USD252.7 million at constant currencies, driven by strong growth in B2B sales and ecommerce.
“We see China as the biggest growth opportunity for Samsonite in next 5 years as its outbound tourism will continue to register healthy growth,” said Tainwala.
According to Euromonitor International, Chinese residents will take 90 million outbound trips in 2020, representing an average growth rate of 13 percent per annum over the past two decades. By 2030, the number is expected to reach almost 126 million, making China the largest outbound market overtaking the US, Germany, and the UK.
Riding the country’s outbound tourism boom, Tainwala expects China to be one of the key drivers of Samsonite’s global growth.
Ecommerce net sales in the country registered a 92.3 percent growth at a constant currency basis in 2015 which shows the change of Chinese consumers’ shopping behaviour – more consumers prefer buying online.
“Channel dynamic in China is changing. Five years ago, department stores sales accounted for 35 percent of our business in China, now the number has come down to 15 percent. Department stores are losing share to ecommerce,” Tainwala pointed out.
Despite the changing Channel dynamic, the travel luggage maker expects the net sales in the country to grow in double digits by shifting its channel strategy, growing non-travel product offering and extending its coverage of the value market.
Tainwala said the company is investing “very heavily” on transforming all its retail stores globally into omni-channel businesses in the next three years.
Consumers will be able to shop online and pick up the products at Samsonite’s stores or walk into the stores and check more product offering online and have their purchases delivered to their doorsteps.
“We are now very aggressively rolling it out in North America, Europe and Korea. In the next three years, all of our stores will be omni-channel ready,” he asserted.
Tainwala attributed the encouraging results of 2015 to the company’s multi-brand, multi-category and multi-channel strategy and confirmed that the company will increasingly invest in multi-brand retail.
The multi-brand store carries the brands from Samsonite family. Consumers are able to choose different brands in one store. Samsonite stared to test the multi-brand strategy at the end of 2014 and had been expanding multi-brand stores in 2015 under the House of Samsonite according to CFO Kyle Gendreau.
In February 2015, Samsonite acquired airport luggage retailer Rolling Luggage, a multi-brand retail chain, which accelerated the expansion of its multi-brand retail footprint.
Started in the US, the multi-brand store format has been tested in Europe, Korea, Hong Kong and mainland China. Although it’s still early days of multi-brand retail format, “the concept will continue to grow not only in Asia but also the world,” concluded Tainwala.
(Source: Yoko Wang)